QUESTION
Is the agreement in March enforceable? Or has there been a reasonable lapse in time. What other options do i have?
Asked on Jul 08th, 2015 on Breach of Contract - Florida
More details to this question:
1. Aug '14: I provided a startup with $20K USD for a 20% stake in the company. There was an option to sell 10% for $200K. The money was needed to create a prototype for VC funding and other fundraising methods were discussed. 2. Jan '15: No funding was raised, the co-founder left the company shortly after and the CEO didn't have the motivation to continue. 3. Mar '15: I requested for the company to liquidate its assets and to pay my money back, the CEO agreed to a refund via email. 4. Jun '15: No money was received but the CEO started work again on the project and is treating my investment like an interest free loan. Will only pay me back once he receives funding. There has been sufficient time since the refund request and I want more than my $20,000 back if they get funded.
1 ANSWER
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Well, unfortunately based solely on your description, I don't see a clear-cut answer... but I do see a few 'maybe's.' That is, the first issue I see is whether your $20k is actually an investment for stock/ownership in the company or whether it should actually be treated as a loan. If it is an investment, the next turn is to look at whether there are any corporate documents like by-laws/operating agreements/shareholder agreements. Those docs would dictate the proper procedure for withdrawing your investment. If none exist, I'd head to the statutes, but I'd need more details. Now, if, instead, it is a loan, I would say you are entitled to payment on the loan and generally loans aren't given at 0% interest. With regard to the email correspondence in March of 2015, the may be enough to satisfy a written agreement. However, whether the $20k is an investment or a loan is still very important because even if the agreement would prove enforceable, the distinction can make a big difference in payment. I've seen these situations before and they can get very difficult if missteps are made. I would highly suggest making an appointment with an attorney for a consultation - and bring any and all documentation you have to the consultation.
Answered on Jul 10th, 2015 at 12:05 PM